How to Manage Your Personal Finance

Budgeting is the foundation to financial freedom. And having a goal, and keeping an eye on it allows you to save efficiently. That is why it is always important to know where our money goes. Here are the 5 tips on managing personal finance from our mentor, Ms. Chriszy Bandong of TGFi.

1. Assess your Finances

One common mistake of individuals is to spend more than what they can really afford. This is true, especially for credit card holders. They can purchase whatever they want, in just one swipe. And this is one reason why many of them are indebted.

Owning a credit card may require you to be watchful on your spending. Credit card charges are very high, that’s why before you acquire one, you have to make sure that your finances is in positive cash flow. Meaning, you must have more money coming in, than going out, so that you will always have some “extra” money to pay balances for your credit card. Because remember, “if you can’t afford to pay cash, you can’t afford it”.

2. Learn to Budget

Budgeting is hard, but it only takes a right mindset to make it easy.

The first thing you should always remember is to have a reason of your savings. Is it for your emergency fund, happy fund, or retirement fund? Having a compelling reason will keep you away from spending your savings for just short term gratification. So make sure you have a purpose why you are saving.

70/30 rule in saving; 70 expenses, 30 savings/investing is recommended for newbies. Depositing your savings in banks is more effective than keeping it with you or somewhere you can easily get access to – like your atm. It would be better; of course, if you have knowledge about banks interests and the current economic situation of the country before you keep your money in the bank.

3. Be Careful with Loan Requests

Family member or friends borrowing money and not paying back is not a rare scenario. And dealing with them can be a tough challenge for individuals who strive to be financially responsible. The sad part is that they will use your relationship to their advantage to push you to make a decision in favor to them.

Although it is always better to give than to receive, you should also need to learn how to say no. It’s hard. But you should always think of your goal – to save. And they should understand that as well.

However, if you have extra money that you are willing to let go (knowing the person won’t pay you back), just tell them it’s no longer a loan. In that sense, you will no longer expect for that person to pay and you will be saved from the hassle of following up when they will pay you back.

4. Start to Invest

Before you invest in financial institutions, it is best that you invest in knowledge first. Being financial literate increases your earning potential. Once you are equipped with the right knowledge on the how tos of investing, you will be able to effectively manage your finances.

Investing must be done as early as possible, so it will have more time to grow. Take for example an executive who started investing on his early thirties, and an assistant who started investing at the age of 21. Even if the executive doubles his investment, he can no longer catch up with the lost years he failed to invest.

Investing is about having financial freedom – being financially prepared and being able to support yourself without income. Although there are risks involved in investing, starting it at the earliest possible time allows you to make mistakes at the same time learn from it. Once you know how the ins and outs of investing, and you start investing now, you’ll surely reap it’s benefits later.

5. Be Debt Free

It feels good to be debt-free. It keeps you away from serious money problems – free you from stress. Being debt-free will require you to make an evaluation on your financial standing. You need to know where your money goes, how hard you spend, how much money you saved and invested.

When you have an overview of your finances, you will be able to decide better when, take for example, you purchase an expensive item. Keep in mind your long term goal. This will be your motivation to keep yourself from spending (on the spot) on something you can’t afford. Thus, keeping you away from borrowing money (or swiping your credit card) to impulse buy, and keeping you away from being indebted.

Mary Chris Bandong is a Civil Engineer and a Financial Literacy Advocate for The Global Filipino Investor (TGFi) based in Singapore.

She works as an Architectural & Structural Coordinator in Shimizu Corporation in Singapore, where she is responsible for the production of architectural, civil and structural CAD drawings for layout, framing plans, elevations, sections, and details based on the latest consultant drawings and other related documents. She prepares technical drawings and plans in coordination with other engineering disciplines, at the same time, assists with the preparation / completion of drawings sketched by Planning Manager and Coordinator.

Aside from her career as an Engineer, Chriszy is also an entrepreneur, having her own travel business, Eight Continents (EC) Travel and Tours.

We want to help at least 1,000 employees and OFWs to start their own business and become Certified Leapreneurs! We know that transitioning from employee to entrepreneur is a BIG STEP so we want to guide you in this exciting journey.